How R and the break-even rate are calculated
One R is the distance from the entry to the stop, the amount a full stop-out costs per coin before fees. Every target is measured in that unit, and the direction comes from the stop: below the entry means a long, above it a short.
1R = |entry − stop|
R at a target = |target − entry| ÷ 1R
blended R = sum of (share closed × target R)
break-even win rate = 1 ÷ (1 + blended R)
The break-even line assumes that a losing trade costs exactly 1R and a winning trade reaches every target. A 1R plan breaks even at 50%, a 2R plan at 33.3% and a 3R plan at 25%. Fees and slippage cut into every win and add to every loss, so each of those numbers moves a little higher in practice.
A worked example
Illustrative numbers only
A long at 100 with the stop at 95, so 1R is 5. Half the position comes off at 105, 30% at 110 and the last 20% at 120.
- Target 1(105 − 100) ÷ 5 = 1R, 50% closed
- Target 2(110 − 100) ÷ 5 = 2R, 30% closed
- Target 3(120 − 100) ÷ 5 = 4R, 20% closed
- Blended0.5 × 1 + 0.3 × 2 + 0.2 × 4 = 1.9R
- Break-even1 ÷ 2.9 = 34.48% of trades
Holding the whole position to 120 makes it a 4R trade that breaks even at 20%, but only trades that run the full 20 points count as wins. With half off at 105 and the stop left where it is, a trade that tags 105 and then stops out comes out flat, and one that reaches 110 first still nets about 0.9R.
Common mistakes
- Measuring R from a stop you don’t keep. If the stop gets moved away when price comes near it, 1R was never 5 points and every figure here makes the plan look better than it is.
- Quoting the last target as the trade’s R. With the example’s split, half off at 1R, 30% at 2R and 20% at 4R, the plan pays 1.9R even though the last target sits at 4R. Compare plans on the blended figure.
- Ignoring fees on tight stops. On a scalp with the stop 0.25% away, taker fees of 0.05% per side cost about 0.4R per round trip, so a 1R target nets about 0.6R and a stop-out costs about 1.4R.
- Targets with no reason on the chart. Prior swing highs and lows and the liquidity resting beyond them are where reactions tend to start. The BOS and CHoCH guide shows how to mark the swings, and the liquidity sweep guide shows where the stops pile up.
Questions
What is the break-even win rate?
It is the share of trades that has to reach the target for the plan to come out flat when every loser costs 1R. The formula is 1 ÷ (1 + R): 50% at 1R, 33.3% at 2R and 25% at 3R, before fees and slippage.
How are partial closes counted?
Each target’s R is weighted by the share of the position closed there. Close half at 1R, 30% at 2R and 20% at 4R and the blended result is 0.5 + 0.6 + 0.8 = 1.9R, provided every target fills.
What if I move the stop to entry after the first target?
Then the rest of the position can no longer lose 1R, and the real risk is smaller than this calculator shows. The figures here assume the original stop stays where it is until each target fills or the stop is hit.
Is a higher R always better?
No. A far target lowers the break-even rate but gets hit less often. The calculator can’t tell you how often a level gets reached; that comes from the chart and from your own trade records.
Other calculators
- Position size calculatorHow many coins to trade so a stop-out costs what you planned.
- Liquidation price calculatorWhere an isolated long or short gets liquidated at your leverage.
- Futures PnL calculatorNet profit or loss after fees, ROE on margin and the price move.